Six Ways Retirees Can Continue Building Wealth

Many people assume that once retirement begins, the focus shifts entirely from growing money to spending it. But because retirement can last for decades, there are still plenty of chances to strengthen savings and extend the life of a portfolio.

That said, wealth building in retirement works differently than it does during working years. Financial experts explained what changes and outlined six approaches retirees can still use to keep building wealth.

1. Keep Some Investments Focused on Growth

Retirees may naturally become more cautious with their money, but shifting too much into cash or fixed-income holdings can weaken long-term growth potential.

Taylor Kovar, a certified financial planner and the founder and CEO of 11 Financial, said many retirees let fear push them into cash or bonds as soon as they stop working. He warned that money left idle for too long can struggle to keep pace with future needs.

Robert Johnson, a certified financial analyst and finance professor at Creighton University, agreed, saying that some de-risking can be helpful, but eliminating risk altogether can leave a portfolio too weak to last.

Kovar said retirees should still keep a meaningful stock allocation as they move into retirement, which may last 20 to 30 years depending on when they stop working.

2. Broaden Diversification Beyond Stocks and Bonds

Retirees can also spread their money across a wider mix of assets instead of relying only on traditional stock and bond holdings.

Brianna Rodgers, director of investor education at Madison Trust Company, said diversification should include not just different stocks and mutual funds, but also alternative asset classes such as real estate, precious metals, private businesses and more.

For retirees with enough capital to invest in income-producing assets such as real estate, Rodgers said those holdings may help generate cash flow inside a self-directed IRA, with growth that can be tax-free or tax-deferred depending on the account type.

3. Use Part-Time Income to Preserve Savings

Retirement does not always mean stopping work completely. Consulting, freelancing or part-time jobs can provide income that reduces the amount retirees need to withdraw from their portfolios, giving invested money more time to grow.

That extra income may also allow retirees to delay dipping into savings sooner than necessary. Kovar noted that if someone still has earned income, they may still be able to contribute to retirement accounts, which many people do not realize remains possible after formal retirement.

4. Consider Roth Conversion Opportunities

Retirement can create lower-income years, especially in the period after leaving work and before required minimum distributions begin. Kovar said that gap can create an opening to convert some traditional retirement funds into a Roth account and potentially lower future taxes.

He cautioned that conversions are not right for everyone because the transferred amount is taxable, but said they are worth evaluating each year with proper guidance.

5. Withdraw Money in a Tax-Smart Way

Protecting more of what has already been saved is also important in retirement, which makes the order in which retirees draw from taxable, tax-deferred and Roth accounts a key part of preserving wealth.

There is no single withdrawal strategy that works best for everyone. Social Security taxation, required minimum distributions, capital gains, Medicare income-related surcharges and a retiree’s broader tax situation can all influence the best approach. Consulting a retirement professional is a wise step.

6. Cut Debt and Ongoing Costs

Retirees do not have to rely only on investment gains to improve their finances. Debt and daily expenses can have an even bigger effect than many people expect, Kovar said.

He added that paying down high-interest debt or downsizing a home can often create more financial flexibility than trying to earn a slightly better return elsewhere.

Retirement does not have to signal the end of wealth building. Kovar said retirement often lasts more than 20 years, and treating its early years as the end of financial planning is one of the biggest missed opportunities.